Hitler's carmaker (Part II)

As the Nazis amassed power, what did GM know - and when? (Second in a series)

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By the spring of 1933, the world was beginning to learn about the lawlessness and savagery of the Nazi regime, and the Reich's determination to crush its Jewish community and threaten its neighbors.
On March 27, 1933, a million protesters jammed Madison Square Garden in New York, and millions more around the world joined in a coordinated show of protest against Nazi brutality. By May 10, 1933, Nazi-banned books were being torched in public bonfires across Germany. The corporate library at General Motors' Opel in Germany was purged, as well, of Jewish-authored publications and other undesirable literature.
Beginning in the late spring of 1933, concentration camps such as Dachau were generating headlines reporting great brutality.
By June 1933, Jews everywhere in Germany were being banned from the professional, economic and cultural life of the country. As state-designated pariahs, they were forbidden to remain members of the German Automobile Association, the popular organization for the general German motorist. Hitler's anti-Semitic demagoguery and the daily, semi-official, violent attacks against Jews were discussed in the American media almost daily.
GM's president Alfred P. Sloan knew what was happening in Germany. Sloan and GM officials knew also that Hitler's regime was expected to wage war from the outset. Headlines, radio broadcasts and newsreels made that fact apparent. America, it was feared, would once again be pulled in.
Nonetheless, GM and Germany began a strategic business relationship. That relationship is largely the focus of a JTA investigative series that re-examines the company's conduct on both sides of the Atlantic before, during and immediately after World War II. GM has declined comment for this story. The company has steadfastly denied for decades that it actively assisted the Nazi war effort.
Unleashing the Blitzkrieg
Opel became an essential element of the German rearmament and modernization Hitler required to subjugate Europe. To accomplish that, Germany needed to rise above the horse-drawn divisions it deployed in World War I. It needed to motorize, to "blitz," that is, to attack with lightning speed. Germany would later unleash a Blitzkrieg, a lightning war. Opel built the three-ton truck named "Blitz" - to support the German military. The Blitz truck became the mainstay of the Blitzkrieg.
Quickly, Sloan and James D. Mooney, GM's overseas chief, realized that the Reich military machine was in fact the corporation's best customer in Germany. Sales to the army yielded a greater per truck profit than civilian sales - a hefty 40 percent more. So GM preferred supplying the military, which never ceased its preparations to wage war against Europe.
In 1935, GM agreed to locate a new factory at Brandenburg, where it would be geographically less vulnerable to feared aerial bombardment by allied forces. In 1937, almost 17 percent of Opel's Blitz trucks were sold directly to the Nazi military.
That military sales figure was increased to 29 percent in 1938 - totaling some 6,000 Blitz trucks that year alone. The Wehrmacht, the German military, soon became Opel's No. 1 customer by far. Other important customers included major industries associated with the Hitler war machine.
Expanding its German workforce from 17,000 in 1934 to 27,000 in 1938 also made GM one of Germany's leading employers. Unquestionably, GM's Opel became an integral facet of Hitler's Reich.
More than just an efficient manufacturer, Opel openly embraced the bizarre philosophy that powered the Nazi military-industrial complex. The German company participated in cultic Fuhrer worship as a part of its daily corporate ethic.
After all, until GM purchased Opel in 1929 for $33.3 million, or about one-third of GM's after-tax profit that year, Opel was an established carmaker with a respected German persona. The Opel family included several prominent Nazi Party members. This identity appealed to rank-and-file Nazis who condemned anything foreign-owned or foreign-made.
For all these reasons, during the Hitler years, Sloan and Mooney both made efforts to obscure Opel's American ownership and control. As a result, the average storm trooper, Nazi Party member or German motorist accepted the company's cars and trucks as the product of a purely Aryan firm that was working toward Hitler's great destiny: "Deutschland uber alles."
The masquerade
Opel became an early patron of the National Socialist Motor Corps, a rabid Nazi Party paramilitary auxiliary. Ironically, most of the members of Corps were not drivers, but Germans seeking to learn how to drive to increase national readiness. Opel employees were encouraged to maintain membership in the Motor Corps.
Furthermore, Opel cars and trucks were loaned without charge to the local storm trooper contingents stationed near company headquarters at Russelsheim, Germany. As brownshirt thugs went about their business of intimidation and extortion, they often came and went in vehicles bearing prominent Opel advertisements, proud automobile sponsor of the storm troopers.
The Opel company publication, Der Opel Geist, or The Opel Spirit, became just another propagandistic tool of Fuhrer worship, edited with the help of Nazi officials. Hitler was frequently given credit in the publication for Opel's achievements, and was frequently depicted in Der Opel Geist portraits as a fatherly or stately figure.
Hitler's voice regularly echoed through the cavernous Opel complex. His hate speeches and pep rallies were routinely piped into the factory premises to inspire the workers. Great swastika-bedecked company events were commonplace, as Nazi gauleiters, or regional party leaders, and other party officials spurred gathered employees to work hard for the Fuhrer and his Thousand-Year Reich. Opel contributed large cash donations to all the right Nazi Party activities. For example, the company gave local storm troopers 75,000 reichsmarks to construct the gauleiter's new office headquarters.
In the process, Opel became more than a mere carmaker. It became a stalwart of the Nazi community. Working hard and meeting exhausting production quotas were national duties. Employees who protested the intense working conditions, even if members of the Nazi Party, were sometimes visited by the Gestapo. SS officers worked as internal security throughout the plant. Order was kept.
Of course, GM's subsidiary vigorously joined the anti-Jewish movement required of leading businesses serving the Reich. Jewish employees and suppliers became verboten. Established dealers with Jewish blood were terminated, including one of the largest serving the Frankfurt region. Even long-time executives were discharged if Jewish descent was detected. Those lower-level managers with Jewish wives or parentage who remained with the company did so stealthily, hiding and denying their background.
To conceal American ownership and reinforce the masquerade that Opel stood as a purely Aryan enterprise, Sloan and Mooney, beginning in 1934, concocted the concept of a "Directorate," comprised of prominent German personalities, including several with Nazi Party membership. This created what GM officials variously termed a "camouflage" or "a false facade" of local management. But the decisions were made in America. GM as the sole stockholder controlled Opel's board and the corporate votes.
Among the decisions made in America beginning in about 1935 was the one transferring to Germany the technology to produce the modern gasoline additive tetraethyl lead, commonly called "ethyl," or leaded gasoline. This allowed the Reich to boost octane that provided better automotive performance by eliminating disruptive engine pings and jolts. Better performance meant a faster and more mobile fighting force - just what the Reich would ultimately need for its swift and mobile Blitzkrieg.
As early as 1934, however, America's War Department was apprehensive about the transfer of such proprietary chemical processes. In late December 1934, as GM was considering building leaded gasoline plants for Hitler, DuPont Company board director Irenee du Pont wrote to Sloan: "Of course, we in the DuPont Company have always recognized the propriety and desirability of closely cooperating with the War Department of the United States. â€¦In any case, I know that word has gone to the War Department and have the impression that they would be adverse to disclosure of knowledge which would aid Germany in preparing that chemical." The profits were simply not worth it, argued du Pont.
Sloan had already bluntly told du Pont, "I do not agree with your reasoning to this question." Days later, Sloan appended that GM's commercial rights were "far more fundamentalâ€¦ than the question of making a little money out of lead in Germany." GM moved quickly - in conjunction with its close ally Standard Oil. Each company took a one-quarter share of the Reich ethyl operation, while I.G. Farben, the giant German chemical conglomerate, controlled the remaining 50 percent.
The plants were built. The Americans supplied the technical know-how. Captured German records reviewed decades later by a US Senate investigating committee found this wartime admission by the Nazis: "Without lead-tetraethyl, the present method of warfare would be unthinkable." Years after the war, Nazi armaments chief Albert Speer told a congressional investigator that Germany could not have attempted its September 1939 Blitzkrieg of Poland without the performance-boosting additive.
Dwarfing the competition
Within a few years of partnering with the Hitler regime, Opel began to dwarf all competition. By 1937, GM's subsidiary had grown to triple the size of Daimler-Benz and quadruple that of Ford's fledgling German operation, known as Ford-Werke. By the end of the 1930s, Opel was valued at $86.7 million, which in 21st-century dollars, translates into roughly $1.1 billion.
In the meantime, GM was responsible for stunning growth in Germany's economy. As most economists of the day knew, and as Sloan himself bragged, automobile manufacturing created thousands of factory jobs, hundreds of suppliers, numerous dealerships, widespread motorization and an attached oil industry.
Moreover, the growth of the highway network, from local roads to the Autobahn, spurred a construction boom that spawned thousands of additional jobs and necessitated hundreds of additional suppliers. Even GM's own sponsored expert historian, who decades later examined Hitler-era documentation, concluded: "The auto industry spearheaded the remarkable recovery of the German economy that boosted the popularity of the Nazi regime by virtually eliminating within a few years the mass unemployment that had idled a quarter of the workforce and contributed so importantly to Hitler's rise."
But Reich currency restrictions obstructed the outflow of cash for profits or even the purchase of raw materials to build trucks. GM in America circumvented those regulations through the overseas sales of German pencils, sewing machines, Christmas tree ornaments and virtually any other exports that would earn foreign currency internationally. Those sales proceeds were then exchanged for profits or raw materials through complicated bank transfers.
On the homefront
Ironically, while GM's Opel was a deferential corporate citizen in Nazi Germany, going the extra mile to comply with Reich requirements and making no waves, Sloan helped foment unrest at home as part of the company's efforts to undermine the Roosevelt administration.
For example, the GM president was one of the central behind-the-scenes founders of the American Liberty League, a racist, anti-Semitic, pro-big business group bent on rallying Southern votes against Roosevelt to defeat him in the 1936 election. The American Liberty League arose out of a series of private gatherings organized in July 1934 by Sloan, du Pont and other businessmen. Some of those meetings were even held at GM's office in New York.
The businessmen sought to create a well-financed, seemingly grass-roots coalition that du Pont declared should "include all property ownersâ€¦ the American Legion and even the Ku Klux Klan." Sloan served on the American Liberty League's national advisory board and was one of a number of wealthy businessmen who each quietly donated $10,000 to its activities. The American Liberty League, which raised more money in 1935 than the National Democratic Party, in turn, funded an array of even more fanatical, racist and anti-Jewish groups.
One such group funded by the American Liberty League was the Southern Committee to Uphold the Constitution. With help from the du Pont family fortune, the Southern Committee circulated what it called "nigger pictures" of Eleanor Roosevelt with African-Americans. Sloan sent a $1,000 check directly to the Southern Committee after those pictures were distributed, according to congressional testimony.
Racist diatribes found in Southern Committee literature included an anti-union screed that complained: "White women and white men will be forced into organizations with black African apes whom they will have to call 'brother' or lose their jobs." The Southern Committee also jointly organized protest marches with the American Nazi "Silver Shirts." The American Liberty League also financed the Sentinels of the Republic. The Sentinels of the Republic, in turn, orchestrated incendiary, anti-Semitic letter-writing campaigns, and otherwise provoked a backlash against Roosevelt and what was sometimes derisively labeled his "Jew Deal."
True, the Sentinels of the Republic bore all the earmarks of a rabble-rousing extremist group. But behind it were some of the nation's most affluent and well-heeled, supplying the operating cash and direction. Among them: Sun Oil President Howard Pew, investment banker Alexander Lincoln who served as the group's president, and the president of Pittsburgh Plate Glass, John Pitcairn. Sloan himself wrote a $1,000 check directly to the Sentinels of the Republic.
Only after an April 1936 congressional investigation was Sloan's financial involvement in the Sentinels outed. Just days after the disclosure, Sloan issued a statement to an inquiring Jewish newspaper in Louisville, promising, "Under no circumstances will I further knowingly support the Sentinels of the Republic."
He added, ambiguously: "I have no desire to enter into any questions involving religious or political questions."
Although Sloan backed away from further financing of the Sentinels, the GM chief continued to fund and fund raise for another anti-Roosevelt-agitation group, the National Association of Manufacturers. Founded in 1895 as a pro-business organization and still prominent more than 100 years later, NAM sowed anti-union and anti-New Deal discord among Americans in the 1930s through clandestinely owned and operated opinion-molding arms.
Roosevelt openly acknowledged that Sloan, GM, the du Ponts and other corporate giants hated him for his reforms and his efforts to relieve Depression-era inequities. In his final 1936 campaign speech, the president threw down the gauntlet, shouting to an overflow Madison Square Garden crowd, "They are unanimous in their hate for me - and I welcome their hatred." Roosevelt added that he wanted his first four years to be remembered as an administration where "the forces of selfishness and of lust for power met their match." Fearing Roosevelt's possible re-election, several of Sloan's top executives at GM actually considered deliberately extending the financial woes of the Depression, presumably in retaliation against the entire nation. In the final days of the 1936 election campaign, several GM officials met with W.H. Swartz, a Lehman Brothers investment banker, according to a historian who studied the incident.
The GM officials apparently planned to stop investing in and expanding their company in the event of Roosevelt's expected victory. Swartz's Nov. 4, 1936, confidential memo about the GM meeting asserted, "Certain General Motors people also felt further capital expenditures could not be expected now, in view of Roosevelt's possible re-election." Based on their plans, Swartz predicted "a break in general business next year ... mid-summer is the logical time to expect it," adding, "I would suggest that the rather intense political emotions of certain of these men may have colored their thinking more than they themselves may have realized."
Despite the lush opposition funding by Sloan and other affluent anti-New Deal nemeses, Roosevelt was re-elected by a landslide.
While no capital slow-down was actually implemented by GM, Sloan did continue to battle the administration. The conflict was not subtle. Washington knew that Sloan and GM were powerful adversaries. For example, in 1937, when Sloan telephoned Secretary of Labor Francis Perkins to renege on a promise made to meet with labor strikers, Perkins lashed out bitterly at the GM chief.
Shocked at the reversal, Perkins shouted into the phone, "You are a scoundrel and a skunk, Mr. Sloan. You don't deserve to be counted among decent menâ€¦You'll go to hell when you dieâ€¦ Are you a grown man, Mr. Sloan? Or are you a neurotic adolescent? Which are you? If you're a grown man, stand up, and be a man for once."
A flabbergasted Sloan protested, "You can't talk like that to me! You can't talk like that to me! I'm worth 70 million dollars and I made it all myself! You can't talk like that to me! I'm Alfred Sloan."
Edwin Black is the author of the award-winning "IBM and the Holocaust" and the recently published 'Internal Combustion: How Corporations and Governments Addicted the World to Oil and Derailed the Alternatives.'

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